The Board of Directors of Södra is submitting a revised proposal for profit distribution for consideration by the General Meeting to be held on 2 June in Jönköping.
The revision entails a dividend of 2 per cent on both paid-in and issued member capital, instead of a 2 per cent member capital issue. It is being presented following the broad dialogues and discussions the Board has held with members during the annual meeting period and with the Council of Representatives. The Board assesses that the change can be implemented without affecting Södra’s financial stability. In addition, the Board has decided to allow trading below nominal value in members’ issued capital, a question that has also been raised by members.
Södra is a member-owned cooperative, where the ownership model means that members, in addition to the returns generated by their forest holdings, also share in the value added created by the industrial operations. This is achieved through profit distribution and plays an important role in contributing to the long-term profitability and value of the forest holding. Over the past ten years, profit distribution in Södra has amounted to SEK 14.3 billion to members, clearly demonstrating the value of being part of a strong cooperative.
The objective over time is to achieve total profit distribution corresponding to 50 per cent of profit before tax. However, results vary from year to year, and profit distribution is therefore reviewed annually by the Board, taking into account Södra’s profitability, future investments and financial position.
In 2025, dramatic changes in the external environment had a significant impact on Södra’s profitability and results. Against this background, the Board made its dividend proposal with great care for the cooperative’s stability and long-term financial strength. Since then, the cooperative has gathered in annual meetings and in the Council of Representatives, where the Board and members have met and where the proposed profit distribution has been the subject of questions and discussions.
“Södra belongs to its members, and a sound democratic process requires space for dialogue, that we listen actively, capture the members’ voice and are prepared to act when needed. Over the past months of discussions, it has become clear to us that the balance between returns on the current year’s timber deliveries and the capital built up through deliveries in previous years is a central issue. We have taken this on board and, together with careful considerations of our financial stability, we assess that Södra can accommodate the change while continuing to manage future challenges. It is now up to the Annual General Meeting to decide,” says Magnus Hall, Chair of the Board.
The revised proposal means that the Board proposes profit distribution totalling SEK 696 million, allocated between timber deliveries and contributed capital. The proposal means that timber deliveries in 2025 continue to be highly valued, while members’ previous contributions to the cooperative are also more clearly recognised.
Revised profit distribution proposal
The Board has previously decided on an updated profit distribution policy that reaffirms the financial targets while also clarifying that profit distribution should reward members who deliver raw material to Södra over time. Members’ contributed capital in Södra is long-term risk capital invested in the cooperative to finance and develop the joint industrial operations. Returns depend on Södra’s results and may vary over time. The profit distribution policy is designed to reward both the most recent year’s timber deliveries and the accumulated deliveries from previous years. In this way, the policy reflects the fact that members’ opportunities to deliver raw material each year differ. Overall, this creates increased clarity and predictability over time.
“Profit distribution is an important part of the value of being a member of Södra and should generate returns on the timber delivered during the most recent year and on the contributed capital built up through historical deliveries. At the same time, we are now clarifying that the timber transaction itself is a straightforward commercial agreement, and that the profit distribution arising when members’ industries generate profits is something extra, like icing on the cake,” says Magnus Hall.
Increased opportunities for members to trade contributed capital
The Board has also reviewed the issue of allowing trading below nominal value for members’ issued contributed capital, i.e. capital that a member has received over the years through profit distribution. The issue has been raised as it could lead to more interested buyers when members wish to release capital. A decision has now been taken to offer this option, with a floor of 80 per cent of nominal value. To manage the new condition on the trading platform, the trading occasion in May will be postponed to June.
The Board’s revised proposal for profit distribution of SEK 696 million consists of:
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Dividend on timber deliveries amounting to approximately SEK 560 million, distributed as: SEK 190 million (SEK 87 per m³fub) for sawlogs, SEK 162 million (SEK 45 per m³fub) for pulpwood, SEK 208 million (6 per cent) for other timber deliveries
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Dividend (2 per cent) on contributed capital amounting to approximately SEK 137 million